Put another way, Dubai is a creature of the internet age. In Dubai, the absolute ruler, Sheikh Mohammed Bin Rashid Al Maktoum, surfs the world for the best urban features he desires, the most effective rules and regulations his advisers ask of him, puts them in a virtual shopping cart, brings them home and sets about building his customised capital.

Lately, Sheikh Mohammed has added a new piece to his vast and ever-growing Legoland: the Dubai International Financial Centre (DIFC), an onshore financial free-zone where everything is tax exempt and companies are free to take capital and profits in and out without restrictions.

Like an oasis for the rule of law, the DIFC is governed by a smorgasbord of commercial laws and financial regulations patterned after those in London, Singapore, Hong Kong, Bermuda and other global financial capitals.

'What we have done is cherry-pick from the best financial legal framework in the world and copied them here,' says Habib Al Mulla, chairman of the DIFC's regulators, the Dubai Financial Services Authority (DFSA), which itself is modelled after regulators in London, Singapore, the US and Hong Kong.

Think of the DIFC as a special financial export-processing zone with its own stock and commodities exchanges, market regulator, tribunals for contractual disputes and corporate governance oversight, and agencies looking after asset and fund management, insurance and reinsurance, and Islamic financial services.

But why create something new when the world already has a surfeit of financial centres?

'A year ago, the financial and capital markets world was divided into two separate regions - the east and the west,' says Omar Bin Sulaiman, the director-general of the DIFC Authority, which is ultimately responsible for the development and supervision of the centre.

'With the DIFC, the circle is complete. We have created a new time zone for the world's financial and capital markets.'

Observers say that this bridging role is only a secondary raison d'etre for the DIFC. They believe that the primary reason for its genesis is to tap into the vast amount of surplus Middle Eastern capital mostly parked abroad.

These petrodollars have largely bankrolled Dubai's edifice complex. They have also fanned corporate-financial deals not seen in decades.

In short, Dubai wants a piece of the action. The fact that the city's oil reserves are dwindling fast has given the creation of the DIFC - and the whole shift of Dubai's economy to tourism and high-technology services - another impetus.

'Due to the continuing oil boom, huge amounts of petrodollars from the Middle East are likely to get invested through Dubai,' says Puru Saxena, the chief executive of wealth management firm Puru Saxena.

One key potential source of mega financing and business for the DIFC is Islamic banking.

Although it trails rival centres such as Kuala Lumpur, Qatar and Bahrain, officials of the DIFC believe that the market is big enough for several players.

'Islamic assets worth about US$500 billion are growing at 15 per cent to 20 per cent a year,' says Khalid Yousaf, the DIFC director for Islamic finance. 'We are not competing with Bahrain and Qatar. Unlike them, Dubai offers an international platform.'

He says the DIFC is trying to institutionalise Islamic finance by setting up the needed infrastructure, such as creating an academy within the DIFC to train and license Islamic finance specialists.

Ultimately, he adds, the DIFC hopes to be where Islamic financial institutions - estimated at 300 globally - can raise funds to boost their capital, as 82 per cent of these entities are capitalised under US$25 million.

The DIFC also aims to corner a share of the insurance and reinsurance as well as asset and fund management businesses.

'Our focus will be more on the wholesale insurance and reinsurance side,' says Fetooh Al Zayani, the DIFC head of insurance and reinsurance.

'Hopefully, as the trend of privatisation and real estate boom in the region continues and as sectors such as aviation mature, we will be able to attract more players to base their business in the DIFC.'

Sandy Shipton, the DIFC head of asset management, is likewise busy putting the finishing touches to regulations that will attract more fund managers.

'What we hope to offer is onshore integrity with offshore pricing,' Mr Shipton says. 'I think we can offer operating costs 10 per cent to 15 per cent lower than in Hong Kong.'

Despite such incentives, some analysts believe it is probably in the fund-raising equities sector where the DIFC can take away some business from Hong Kong or other Asian markets.

'In my view, the Dubai International Financial Exchange (DIFX) is a viable listing platform for Asian companies,' Mr Saxena says.

In fact, according to Nasser Alshaali, the chief operating officer of DIFX, they are in talks with Chinese firms 'involved in distribution' for potential listing in the DIFX's fledgling stock exchange.

Some officials have hinted that companies from India, Pakistan, Indonesia and Malaysia have made inquiries about offering their shares on the DIFX. However, some market observers are sceptical.

'The size and liquidity of the [DIFX] market is not yet established,' says Mark Mobius, the managing director of Templeton Asset Management.

'They don't pose a challenge to [the Hong Kong exchange] or other Asia-Pacific markets yet because large institutional investors are not able to properly invest in Dubai or through the Dubai market. The boards of directors of the various funds must approve investing in that market.'

Still, Mr Mobius does not see any reason why DIFX cannot improve its liquidity.

Mr Saxena says there are two reasons why the DIFX does not pose an immediate threat to Hong Kong and other Asian markets.

'First, Asia is a hot investment destination with a bright future due to its rapidly growing economy. And second, markets are extremely well-regulated in Asian centres such as Hong Kong, Singapore and Japan,' he says.

It is this issue of regulation that worries potential investors. It may be true that the DFSA has adopted the best practices from the top global markets, but implementation is another matter.

'It has yet to be tested,' concedes Mr Habib.

Aside from regulatory concerns, the DIFX - and the whole DIFC enterprise - also faces the niggling issues of political risks in the form of terrorism and the sheikh succession, an event that may lead to regulatory and policy changes, as Dubai is governed under an autocracy.

'Yes, there is always a risk and a government without the proper rule of law and a country threatened by radical Muslim elements can pose an investment risk,' Mr Mobius says.

'However, it seems that Dubai can establish a viable market if they continue to develop the way they have been doing up to now.'

Indeed, Mr Nasser says: 'Your guarantee is Dubai Inc. That's all you need in Dubai.'

'What we have done is cherry-pick from the best ... in the world and copied them here'

Habib Al Mulla

Dubai Financial Services Authority